Coping with the Tech City gold rush: Frugl
There's a lot of glamour attached to the startup world, especially when it comes to technology. But is it all it's cracked up to be? Suzanne Noble is the founder of Frugl, a marketplace for London's best cheap events, and knows the London tech scene inside and out. Here she sh her experience of the Tech City startup gold rush.
It’s now coming up to nearly two years since Frugl was launched. In startup land, that’s practically a lifetime. It's been much harder than I thought. It took eighteen months to raise our first Angel round when I was convinced it would take six. Since we started we have watched many of our competitors go by the wayside, while others have raised vast sums of money without having the ability to monetize.
Nobody has yet written the manual on how to create a successful startup, although there are plenty of ‘advisors’ in Tech City willing to give you their opinion. Over the past 24 months I’ve done more pitches, been to more demos and met more startup founders than all the hot-desking spaces in Shoreditch put together.
I’ve made use of my PR background to drum up awareness time and time again; it’s amazing how resourceful one becomes when the success or failure of one’s own business relies on it. Most of all, I’ve realized that, while there will also be the lucky few who get by because of who they knew, for most of us it’s about buckling down and getting on with it. There is no magic formula to making it other than trying, failing, getting back up and starting again. In the back of my mind I often recall something a prospective investor told me: “Stay lean. Keep your nerve. And hold on. You’ll get there.”
The longer I’ve been involved in the London startup scene, the longer I can’t help feeling that I’m a character in The Truman Show. For those too young to remember, The Truman Show is a film starring Jim Carey, who doesn’t realise that his entire life is a fake one and that he is, in fact, living in a giant film studio and all the people he thinks are his friends and colleagues are actually actors. There’s a lot of noise and excitement around startups but mostly it’s just empty words, and very few are being honest about how hard they are finding it.
Either that, I’m an extra in the silent film Gold Rush where, in the updated version, gold nuggets would be replaced by a shiny new app that has the potential to make its founder a few million before they’ve hit 25. As I’m old enough to remember and was lucky enough to make a lot of money during the first dot com boom of the mid-nineties, I’ve seen this all before. What makes this time around different is that I’m no longer running a PR agency charging fat retainers to naive entrepreneurs; I’m on the other side of the fence. Back then life was cushy - now it’s just gritty.
Hardly a day goes by when I don’t read about a startup that has raised £200k or more based on an idea that seems so ludicrous I can’t actually believe anyone would actually fund it. Then there’s all the networking events, filled with young entrepreneurs, all flapping around the one or two Angel investors in the room, hoping that one might open their checkbook and fund an idea that hasn’t even been properly prototyped or researched. All the media hyperbole around the London start-up scene has created this false impression that all it takes is a good idea and a wad of cash.
Meanwhile, if like me, you read the daily newsletter published by CB Insights, a data analytics company that looks at ‘what’s next,’ competitive trends and the startup ecosystem, you’ll have noticed a worrying (or inevitable, depending on how you look at it) trend. US start-ups are not being funded at the level they once were, the bigger internet businesses are taking a hit on the stock market, while others are doing down rounds. When the earth shakes in Silicon Valley, the rest of the world’s startup ecosystems feel it. Even if the bubble isn’t actually bursting, it’s certainly feeling very wobbly. Investors seem to be waking up to the fact that it takes more than a good idea to make money; it also takes an experienced team, a bit of luck and good, old-fashioned commercial savvy.
If you are one of those lucky startups who have managed to raise your first £150k SEIS for a product or service that doesn’t yet exist, my advise to you, right now, would be to figure out how you’re going to monetize as quickly as possible. You’ll be far more attractive to investors when you’re already making money and, if you’re lucky, you might even be able to survive without any cash injection whatsoever.
As a start-up founder running on fumes, we are constantly reevaluating our business. We simply don’t have the luxury of spending hundreds of thousands to test whether any of our ‘ideas’ actually have any merit or keeping someone on our team who doesn’t pull their weight. Decisions are made very quickly. In the space of two years we’ve gone from a curated app to a marketplace on web/mobile and mobile apps. If something works, it stays; if it does not, it goes.
Two years may seem a long time in the life span of a business, but every day I’m learning something new. I’ve also developed an incredibly thick skin, which is necessary if I don’t want Frugl end up as another startup casualty. We’ve still got plenty of tricks up our sleeve, and we’re looking forward to the year ahead. Watch this space.